IMO this is much too little additional return to put your personal residence at risk.  

What I found was, yes it was nice have additional income, but each project seemed to always interfere.

Additional DetailsI’m willing to invest in out-of-state properties, though I prefer areas with good property management options.My primary focus is passive income, but I’m also interested in value-add opportunities.I want to ensure these investments provide strong tax benefits and diversify my portfolio.I’d love to hear from experienced investors:What would you do in my position?

Most lenders who order appraisals are required to order them through a 3rd party AMC, which can add additional costs to the appraisal but ensures that there is no lender (Or borrower) bias in regards to the values.

Here is a video that runs down the basics - https://s-media.nyc.gov/agencies/specialenforcement/01-Legal...There is also a prohibited building list - https://www.nyc.gov/site/specialenforcement/registration-law...Here are some more info overall - https://www.nyc.gov/site/specialenforcement/registration-law..All of this makes STRs in the city pretty tough but it certainly not impossible.

Verify if there are additional adults or other violations.

If its general information, Bigger Pockets has a ton of info that you can learn at your own speed, just type "STR" or "Short Term Rental" in the search bar and a bunch of info will show up. 

Even successful and furnished properties often need a refresh and at least some additional reinvestment due to wear and tear. - Production: Typically STR production on the Oregon Coast is +/- 10% of valuation.

@William Taylor where did you get the tax info from?

Once you get this information to them you will also be required to do a zoom call and walk around showing them some of this info - the office, any signage, and locks on doors.